PACRA Maintains Entity Ratings of First Women Bank Limited

The ratings primarily reflect strong association of FWBL with the Government of Pakistan (GoP) - the major shareholder - demonstrating continued commitment and support. Subsequent to injection of equity of PKR 1bln over last two years, GoP has injected another PKR 500mln in 1QCY17. The bank thus has reached to a capital of PKR ~4bln. The management has brought clarity to strategic direction of the bank with independent focus on commercial and developmental mandate of FWBL. During CY16, as the spreads further squeezed, business margins were challenged, hence, the bank booked loss for the year after recording profit in previous year; hence profitability is a challenge. On the upside, the bank has registered growth in volumes. The bank's high cost operational structure &#45 though controlled on YoY basis &#45 and provision expense on increasing non-performing loans continued to drag the performance. Cognizant of the matter, the management targets volumetric growth in deposits and advances, herein, efficient and effective use of the IT system along with synergies are being explored with other institutions to lend profitably with limited risk exposure. The internal control system of the bank has depicted steady improvement. The management is focusing to reduce its funding cost; thereby improving its spreads. Meanwhile, given recent capital compliance, the management has resources and clarity available to implement its business plan.

The ratings are dependent on the bank's ability to achieve bottom-line profitability on a sustainable basis. Successful execution of the new business strategy, while improving efficacy of the risk management framework to improve asset quality - which is currently suppressed - remains important.

About the Entity
First Women Bank Limited (FWBL) was established in 1989. The bank operates through a network of 42 branches spread over 24 cities nationwide as at end-Sep17. The bank focuses on catering to women at all levels of economic activity; micro, SME and corporate. Government of Pakistan owns majority stake - 82% (80% through Ministry of Finance and 2% through NBP) in the bank. Rest of the shareholding is with a group of four large banks.

The seven-member BoD includes the President and six NEDs. At present, one member is nominated by GoP, three are independent while two members represent other shareholders. The president is directly appointed by MoF. Ms. Tahira Raza, the President, joined the bank in April-14. Ms. Raza was with the bank in its initial days as well. She is spearheading newly gained business focus at the bank. The top management comprises experienced members, some of them recently engaged.